WC-6/23: Expect a Slightly Bearish Week
Market slows as investors anticipate Q2 earnings.
I Kid You Not
I wrote a whole section about the likelihood of the U.S. getting involved with the Israel-Iran conflict. Then, Saturday happened. I don’t know how the $VIX isn’t exploding overnight.
Anyways, along with potential WW3, there’s confusing earnings expectations, and reportedly even more layoffs by Microsoft which, to me, is a sign that there won’t be any strong swing in tech hiring in the coming months.
As the market gears up for Q2 earnings reports at the end of the month, next week is expected to be notably slow and directionless. With major companies holding back key announcements and investors waiting for new movement, trading activity will likely remain muted.
This period of anticipation often leads to lower volatility and tighter price ranges, as institutions avoid making aggressive moves until earnings data provides clarity. While short-term indicators show mixed signals, the broader market appears to be entering a phase of hesitation—not due to panic, but by cautious indecision.
S&P 500 RSI: 56.69 and cooling down from the momentum from last week
As predicted, the RSI decreased from 68.38 to 56.59 this week. The momentum has slowed down and the peak has fell, leading into a tight consolidation period for the rest of this week. Expect the RSI to remain in the 50-60 (medium) range for the rest of this week or even mild pullback as the market recovers from last week.
McClellan Oscillator (S&P 500): -15.18 and remaining mildly negative
As predicted once again, the McClellan Oscillator has fallen deeper than it was last week. This negative reading reflects more declining stocks than advancing ones, implying decreasing market breadth. Additionally, a value of around -15 often implies short-term caution—markets may drift lower or trade choppily as fewer stocks support the index. There is nothing to be alarmed for the long term of course, just continued signs that the market is taking a breather. This dip in momentum typically signals consolidation rather than collapse, as investors wait on stronger catalysts—such as upcoming Q2 earnings—to reset direction.
This Week’s Market Catalyst: Anticipation of Q2 Earnings
As we head into the final stretch of June, markets are shifting with Q2 earnings just around the corner on June 30. Most financial institutions are treading lightly, unwilling to make aggressive moves without confirmation of earnings strength across key sectors. As a result, trading volumes are expected to be thin and concentrated, and volatility should remain subdued—unless an unforeseen event occurs.
The Federal Reserve’s comments from the previous week still linger in the background, but with no major policy updates expected, investors are turning their focus toward corporate performance and forward guidance. Any early earnings pre-releases from companies in tech, finance, or consumer sectors could shake things up midweek, so keep an eye out for those.
Additionally, continued geopolitical uncertainty (especially involving U.S. posture in Middle East tensions) may create short bursts of movement, particularly in defense, energy, and cybersecurity stocks like Lockheed Martin (LMT), ExxonMobil (XOM), and Palantir (PLTR). However, the market as a whole is likely to trade sideways, staying in a holding pattern until real data hits the table.
This week will be about positioning, not performance. The big moves will likely happen post-earnings. For now, just have patience.